National Cas. Co. v. Lockheed Martin Corp.

• Court: U.S. District Court — District of Maryland
• Writing for the Court: Williams
• Citation: National Cas. Co. v. Lockheed Martin Corp., 415 F.Supp.2d 596 (D. Md. 2006)
• Decision Date: 17 February 2006
• Docket Number: No. CIV.A. AW-05-1992.,CIV.A. AW-05-1992.
• Parties: NATIONAL CASUALTY COMPANY Plaintiff, v. LOCKHEED MARTIN CORPORATION, Defendant.

Page 596

415 F.Supp.2d 596

NATIONAL CASUALTY COMPANY Plaintiff, v. LOCKHEED MARTIN CORPORATION, Defendant.

No. CIV.A. AW-05-1992.

United States District Court, D. Maryland, Southern Division.

February 17, 2006.

COPYRIGHT MATERIAL OMITTED

James W. Bartlett, III, Semmes Bowen and Semmes PC, Baltimore, MD, for Plaintiff.

Robert A. Gaumont, DLA Piper Rudnick Gray Cary US LLP, Baltimore, MD, for Defendant.

MEMORANDUM OPINION

WILLIAMS, District Judge.

National Casualty Company ("Plaintiff" or "National Casualty") brings this suit for declaratory judgment against Lockheed Martin Corporation ("Defendant" or "Lockheed Martin") to resolve a dispute concerning the scope of coverage of the insurance policy issued by Plaintiff for Defendant's vessel the M/V Sea Slice (the "Policy"). In particular, Plaintiff seeks a declaration from this Court that Defendant's claims for coverage under the insurance policy are time-barred. In the alternative, Plaintiff asserts that even if these claims are not time-barred, this Court should enter judgment limiting the amount Defendant may recover under the Policy to $718,945 and declare that the Policy does not cover Defendant's administrative expenses and legal fees. Currently pending before the Court are Defendant Lockheed Martin's Motion for Judgment on the Pleadings [4] and National Casualty's Motion to Strike Defendant's Demand for a Jury Trial [6]. The Court has reviewed the entire record, as well as the pleadings with respect to the instant motions and has determined that no hearing is necessary. See Local Rule 105.6 (D.Md.2004). For the reasons stated more fully below, the Court will grant in part and deny in part Defendant's Motion for Judgment on the Pleadings and grant Plaintiffs Motion to Strike Defendant's Demand for a Jury Trial.

FACTUAL AND PROCEDURAL BACKGROUND

The following facts are taken in the light most favorable to Plaintiff. Plaintiff provided insurance coverage to Defendant for its vessel the M/V Sea Slice (the "Vessel") under Lockheed Martin's "Primary Marine Fleet Insurance Program."

The Policy contains two provisions regarding limitations on filing suit against National Casualty. Under Clause 5 of the Policy's "General Conditions":

[t]he Underwriters agree that any action or proceeding against them for the recovery of any claim under or by virtue of this policy shall not be barred if commenced within the time prescribed therefore in the statutes of the State of New York.

(The Policy, General Conditions ¶ 5). The Policy sets forth a different statute of limitations in Clause 28, entitled "Suit Against Underwriters," which specifies:

No action shall lie against Underwriters for the recovery of any loss sustained by the Assured unless such action is brought within one year after entry of any final judgment or decree in any litigation against the Assured, or in the event of a claim without the entry of such final judgment or decree, unless such action is brought within one year from the date of the payment of such claim, anything in this Policy, any law, ruling or statute of limitation to the contrary notwithstanding.

(The Policy, General Conditions ¶ 28).

Parties do not dispute that the Vessel sustained hull-and-machinery damage during a voyage from Hawaii to Alaska and that the Policy covered at least some of this damage. On July 30, 2001, the fuel in the Vessel became contaminated due to an improperly sealed fuel line cap, which caused seawater to leak into the fuel tank. The next day, the Vessel suffered a series of electrical, mechanical, and structural failures, which resulted in the engine room flooding. The ship's operators decided to curtail the M/V Sea Slice's maiden voyage and arranged to have the ship towed back to Hawaii for repairs on August 1, 2001. While mechanics performed the initial repairs, the Vessel sustained more damage. It was involved in an allision¹ with another docked vessel on August 4, 2001, and the Vessel collided with its tug on August 15, 2001. The latter occurrence resulted in the engine room flooding yet again.

Defendant submitted an initial claim to Plaintiff for over $2 million for the damage to the Sea Slice. On July 21, 2003, Plaintiff issued a check to Defendant for $666,319, which Plaintiff believed represented the reasonable repair costs less applicable deductibles. Defendant, however, did not agree with Plaintiffs estimates of Defendant's losses and returned the check to Plaintiff uncashed.

Defendant then submitted a revised claim to Plaintiff on April 15, 2005 for $2,631,689. Two months after Defendant submitted the revised claim, Defendant's counsel wrote to Plaintiff to confirm that the statute of limitations under New York law applied to suits concerning the Policy. In response, Plaintiff filed suit in this Court on July 23, 2005, seeking a declaration that the one-year limitations period described in Clause 28, rather than the limitations period detailed in Clause 5 applied to this dispute. Plaintiff's Amended Complaint identifies its claim as a non-jury admiralty claim, pursuant to Rule 9(h) of the Federal Rules of Civil Procedure.² On October 17, 2005, Defendant filed a Motion for Judgment on the Pleadings and its Answer to the Amended Complaint, in which it set forth a counterclaim for breach of contract predicated on this Court's diversity jurisdiction. Defendant made a demand for a jury trial on its counterclaim. On October 31, 2005, Plaintiff filed a response to Defendant's Motion as well as a Motion to Strike Defendant's Demand for a Jury Trial.

ANALYSIS

I. Defendant's Motion for Judgment on the Pleadings

Defendant requests that this Court grant it judgment on the pleadings, pursuant to Rule 12(c). Rule 12(c) provides that after the pleadings are closed, a defendant may present a defense of failure to state a claim upon which relief may be granted by a judgment on the pleadings. See Fed.R.Civ.P. 12(c), (h)(2). A motion for judgment on the pleadings is subject to the same standards as a Rule 12(b)(6) motion to dismiss. See Burbach Broad. Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 405-06 (4th Cir.2002); Fare Deals, Ltd. v. Glorioso, 217 F.Supp.2d 670, 671 (D.Md.2002). For such a motion, the court must deny the motion "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief." See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). In determining whether to dismiss a complaint pursuant to Rule 12(c), this Court must view the well-pleaded material allegations in the light most favorable to the plaintiff and accept the factual allegations contained within the plaintiff's complaint as true. See Flood v. New Hanover County, 125 F.3d 249, 251 (4th Cir.1997) (citing Estate Constr. Co. v. Miller & Smith Holding Co., Inc., 14 F.3d 213, 217-18 (4th Cir.1994)); Chisolm v. TranSouth Finan. Corp., 95 F.3d 331, 334 (4th Cir.1996).

The Court, however, is "not bound to accept as true a legal conclusion couched as a factual allegation." See Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) (citing Briscoe v. LaHue, 663 F.2d 713, 723 (7th Cir.1981)); Young v. City of Mount Ranier, 238 F.3d 567, 577 (4th Cir.2001) (the mere "presence ... of a few conclusory legal terms does not insulate a complaint from dismissal under Rule 12(b)(6)"). Nor is the Court "bound to accept [Plaintiff's] conclusory allegations regarding the legal effect of the facts alleged." United Mine Workers of Am. v. Wellmore Coal Corp., 609 F.2d 1083, 1085-86 (4th Cir.1979); Neitzke v. Williams, 490 U.S. 319, 326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989).

Therefore, an action may be dismissed as a matter of law only if the complaint lacks a cognizable legal theory or if it alleges insufficient facts to support a cognizable legal theory. See Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.1984) (citing 2A J. Moore, Moore's Federal Practice 1112.08 at 2271 (2d ed.1982)).

Defendant urges this Court to dismiss National Insurance's Amended Complaint because it argues that the limitations period in Clause 5, not Clause 28, applies to this action. In Clause 5, the parties agree that, in general, suits concerning the Policy must be brought within the limitations period set by New York law, which is six years for breach of contract actions. N.Y. C.P.L.R. § 213(2) (McKinney 2004). On the other hand, Clause 28 carves out an exception to this general rule and provides that certain suits must be brought within one year from the date the cause of action accrues.

To resolve this conflict, the Court must begin by looking to Maryland law.³ Under Maryland law, insurance policies are interpreted in the same manner as contracts generally; and Maryland law does not adhere to the rule that an insurance policy should be construed most strongly against the insurer. See Collier v. MD—Individual Practice Ass'n, 327 Md. 1, 607 A.2d 537, 539 (1992). As with all other contracts, a court must attempt to ascertain and give effect to the intentions of the parties at the time of contracting. See Levy v. American Mut. Liab. Ins. Co., 195 Md. 537, 73 A.2d 892, 894 (1995). To determine the parties' intent, the court must view the instrument as a whole, attributing to each word its normal or customary meaning, unless some indication exists that the parties intended to use words in a special technical sense. See Kendall v. Nationwide Ins. Co., 348 Md. 157, 702 A.2d 767, 771 (1996); Sullins v. Allstate Ins. Co., 340 Md. 503, 667 A.2d 617, 619 (1995); Nolt v. United States Fidelity & Guar. Co., 329 Md. 52, 617 A.2d 578, 584 (1993); Collier, 607 A.2d at 539. While the character of the contract, its object and purposes, and the factual circumstances of the parties at the time of execution may assist in interpreting the meaning of a particular contractual provision, clear and unambiguous language must be enforced as written. See Dutta...